Siddarth Roy Kapur, 36, runs India’s second-largest studio and, by far, the most profitable one. On an average, UTV releases a dozen movies a year. In 2009-10 these raked in Rs 315 crore or roughly half of the company’s total revenues, and more than half its operating profits. More importantly, it has brought scale and sanity to the hugely fragmented and chaotic film production and distribution business. An MBA by training, Kapur was a hardcore consumer goods man before the media bug bit him. He joined Star India in 1999 and worked on the first season of Kaun Banega Crorepati and Kyunkii Saas... among other projects before moving to Hong Kong. In 2005, he joined UTV, because “Ronnie (Screwvala, UTV CEO), sold me on his vision”. Vanita Kohli-Khandekar talked to him on why the movie business is having a bad time and how it could grow further. Edited excerpts:
Has it been a bad year for the industry or does it look like it has?
It has been a unique year because of the three months of non-stop cricket. Hence, there have been fewer releases. The last four months have seen the release of No One Killed Jessica, Yamla Pagla Deewna, Tanu Weds Manu and Dhobi Ghat. And all the films have been accepted by audiences. So, it tells you that an interesting mix is working. From June onwards the big films will start coming. There are two Shah Rukh Khan films, two Salman Khan movies and lots of international ones.
How would you differentiate between the Yashraj Films (YRF), UTV and Eros ‘studio’ model?
We are in distribution because we are in content creation and aggregation. We believe our core competence is content. In that sense, I suppose we are similar to YRF. However, we do about 12 films a year. So, on scale we are different. (YRF does about three-four films a year). Also, they are different because they are headed by a director/producer combination (Aditya Chopra/Yash Chopra). Eros is more about content aggregation. (The Rs 655 crore Eros averages 100 releases a year).
I still don’t think scaling up can go from 12 to 26 to 52 films. I think 12-15 is the sweet spot because of the amount of trial and error and top-level involvement required in content creation. It is a touch and feel business. Therefore, relationships are important, and so scale becomes a challenge. In Hollywood, they do even lesser (than 12-15 films a year) perhaps.
While corporatisation has achieved a lot, what more can be done to unlock the full value potential of this business? More than 1,000 films and a film crazy country of 1.2 billion people should amount to more than $2 billion odd in revenues?
There are three things that could help do that. Tackling piracy. We have to accept that we cannot eliminate physical and online piracy, but we have to deal with it.
Therefore, skilfully using windows of release. The windows are collapsing because of piracy. So, not being able to monetise doesn’t help. (Film companies want to release films on TV, DTH, home video and other formats within a week or so of a film’s release. Theater owners resist this because it reduces their opportunity to exploit a film. The gap between a film’s theatrical and TV/home video release, called a window of release, is usually filled by pirates with cheap copies).
Finally, creating franchises and then doing prequels and sequels. A film that can then spawn off a range of revenue streams, licensed merchandising, themes parks, like Disney does.
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Why is the non-Hindi play so insignificant in the portfolio of most studios?
UTV does films in Hindi, Tamil, Telugu and Malayalam. There are other languages that are doing well like Bhojpuri and Punjabi. There are several entertainers from Bhojpuri. But between south and north (languages) there is no overlap. Other markets have a lot of overlap with Hindi.
How has the economics of the business (composition of operating costs and revenues) changed as corporatisation and scale have come in?
Five years ago theatricals brought in 70-75 per cent of a film’s revenues, with music, overseas, satellite etc bringing in the rest. Today, theatres bring in 50-55 per cent, satellite is the second largest contributor at 20-25 per cent of revenues. New media revenues (IPTV, VoD, PPV) is a growing proposition though it is still very small.
On the cost side, the biggest rise has been in the print and publicity cost because the noise level is so much. For instance, we spent Rs 2 crore on marketing Rang De Basanti in 2006. If we had to market it today, it would cost Rs 7-8 crore. Also, there are talent costs which in a film form more than half the production cost. They are 30-40 per cent more than they should be. But that is the function of a lot of money chasing a limited pool of talent. Why not take newcomers?
We do. Look at Welcome to Sajjanpur, Dev D, A Wednesday.
Most multiplex films seem like they would do better on home video or pay-per-view. Is it critical that even a small intimate film is released in the theatre?
A high (brow) film has to have a one line that can make it marketable, otherwise it is an uphill task to get people into the theatre. For instance, Mumbai Meri Jaan was about the train blasts in Mumbai, it was a heavy subject. Dev D on the other hand was fun and easy to market. Both, however, were small films. Does that mean they don’t need a theatrical release? I don’t think audiences would buy it on TV if there hasn’t been a theatrical release.
